Fuels Market Watch 24

FUEL MARKETS TODAY – Market Overview

Oil prices sank sharply yesterday, as oil inventories appeared to swell once again, and the selloff in equities endured. This morning, prices are inching back up. WTI (West Texas Intermediate) crude prices in today’s trading session opened at $66.17, down by a hefty $3.38 from yesterday’s opening price of $69.55/b. This was the lowest opening price for WTI since June 2015. Gasoline and diesel futures prices also opened lower this morning. Prices appear to have hit bottom, however, and crude and product prices are recovering slowly this morning.

Prices plummeted yesterday when the American Petroleum Institute (API) reported a massive addition to U. S. crude oil inventories—9.88 million barrels (mmbbls.) Analysts had predicted a stock build of 3.694 mmbbls. Last week, prices received a boost when the API reported a surprise drawdown of 2.13 mmbbls. The price rally quickly reversed when the Energy Information Administration (EIA) later released official statistics showing instead a build of 6.49 mmbbls. The EIA will publish the official weekly data later today, a release that will be awaited with more than normal curiosity.

Saudi Arabia also is using its influence to calm oil markets. Saudi Energy Minister Khalid al-Falih has said that the oil sector would be kept separate from the worsening diplomatic crisis, portraying the Saudi industry as a continued good citizen in the global oil market. Mr. al-Falih stated that Saudi Arabia would step up to “meet any demand that materialises to ensure customers are satisfied.”

Global stock markets had another down day yesterday. A late rally in the U.S. recouped some losses, but not enough to regain the day’s loss before market closing. Corporate earning reports have been showing huge variability. Today is expected to bring a stronger opening, but major market indices remain down. There is a growing concern that global economic growth is slowing. The International Monetary Fund (IMF) recently cut its economic forecasts, noting trade wars and emerging market woes.